Strike Price, Option Premium & Moneyness

When selecting options to buy or sell, for options expiring on the same month, the option's price (aka premium) and moneyness depends on the option's strike price.

Relationship between Strike Price & Call Option Price

For call options, the higher the strike price, the cheaper the option. The following table lists option premiums typical for near term call options at various strike prices when the underlying stock is trading at $50

Strike Price

Moneyness

Call Option Premium

Intrinsic Value

Time Value

35

ITM

$15.50

$15

$0.50

40

ITM

$11.25

$10

$1.25

45

ITM

$7

$5

$2

50

ATM

$4.50

$0

$4.50

55

OTM

$2.50

$0

$2.50

60

OTM

$1.50

$0

$1.50

65

OTM

$0.75

$0

$0.75

Relationship between Strike Price & Put Option Price

Conversely, for put options, the higher the strike price, the more expensive the option. The following table lists option premiums typical for near term put options at various strike prices when the underlying stock is trading at $50

Strike Price

Moneyness

Put Option Premium

Intrinsic Value

Time Value

35

OTM

$0.75

$0

$0.75

40

OTM

$1.50

$0

$1.50

45

OTM

$2.50

$0

$2.50

50

ATM

$4.50

$0

$4.50

55

ITM

$7

$5

$2

60

ITM

$11.25

$10

$1.25

65

ITM

$15.50

$15

$0.50

Strike Price Intervals

The strike price intervals vary depending on the market price and asset type of the underlying. For lower
priced stocks (usually $25 or less), intervals are at 2.5 points. Higher priced stocks have strike price intervals of 5 point (or 10 points
for very expensive stocks priced at $200 or more). Index options typically have
strike price intervals of 5 or 10 points while futures options generally have strike
intervals of around one or two points.

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